** At the close, the Shanghai Composite index was down 0.6 percent at 3,291.38, while the blue-chips CSI300 index ended 0.4 percent lower at 4,073.34.

* China's industrial output grew much faster than expected at the start of the year, suggesting the economy may be picking up momentum even as U.S. President Donald Trump readies hefty tariffs against one its most strategic growth drivers -- technology.

** Tariffs on tech exports could potentially hit the fastest growing segment of China's industrial sector, an area that the country's leaders have been keen to promote as they push for "higher quality" economic growth.

** Trump is seeking to impose tariffs on up to $60 billion of Chinese imports in the very near future and will target the technology and telecommunications sectors, Reuters reported on Tuesday.

** "There is a good possibility that Trump will do a lot more against China ... The trade situation is obviously a rising risk and a relatively new challenge for China," said economist Kevin Lai at Daiwa Capital Markets in Hong Kong.

** The tech-heavy start-up board index ChiNextp dropped 1.7 percent.

** Telecommunications and IT firms also lost ground, with an index tracking major telecomms shares shedding 1.2 percent.

** China's securities regulator on Wednesday slapped a record 5.5 billion yuan ($870.46 million) fine on a Chinese company for share price manipulation, dampening the risk appetite further, in particular for small-caps.

** The largest percentage gainers in the main Shanghai Composite index were Liuzhou Liangmianzhen Co Ltd, up 10.09 percent, Beijing Dynamic Power Co Ltd, up 10 percent and Huaxin Cement Co Ltd, up 8.68 percent.

** The largest percentage losers in the Shanghai index were Shanghai Fukong Interactive Entertainment Co Ltd down 9.98 percent, followed by Changshu Fengfan Power Equipment Co Ltd, down 9.97 percent and Yonyou Network Technology Co Ltd, down 9.72 percent.

** About 15.75 billion shares were traded on the Shanghai exchange, roughly 82 percent of the market's 30-day moving average of 19.19 billion shares a day. The volume in the previous trading session was 17.71 billion.

** As of 07:01 GMT, China's A-shares were trading at a premium of 25.39 percent over the Hong Kong-listed H-shares.